FTSE tumbles as harsh sanctions hit risk sentiment. EUR/USD drops towards 20 month lows.
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FTSE tumbles as harsh sanctions hit risk sentiment
The FTSE along with its European peers are heading for a sharply lower start to the week.
Harsh sanctions placed by the West on Russia over the weekend, such as excluding some Russian banks from SWIFT international payment system, has prompted a strong response from Russia, whilst sending the ruble to a record low.
Putin has put Russia’s nuclear forces on high alert and fighting in Ukraine continues. There has been some chatter of peace talks between Russia and Ukraine, although given the steep sell off expected on the open markets are putting much hope in those talks achieving much..
There is no UK data due today, sentiment will be the driving force.
BP will be under the spotlight after announcing that it will off load its 19.75% Rosneft stake.
Where next for the FTSE?
After attempting to move back over the rising trendline on Friday, the FTSE has fallen back through this support, to the 100 sma. The RSI has moved back below 50 into bearish territory, suggesting more weakness could be on the cards. That said 7400 the November high appears to be offering some support.
A break below here and the 100 sma at 7370 could open the door to 7250 Friday’s low, ahead of 7185 the 2022 low. A break below this level would be significant as it would create a lower low.
On the upside, 7500 is a key level, the 50 sma and the rising trendline support ahead of 7570 last week’s high.
EUR/USD drops towards 20 month lows
EUR/USD is falling towards fresh 20-month lows on Monday as Russia, Ukraine headlines favor the safe haven US dollar.
News that Belarus is considering joining the Russian invasion is adding to the risk off feel. Meanwhile, strong sanctions from the West risk Russia retaliating, threatening a nuclear response or potentially a slowing of oil supply.
There is no high impacting eurozone or US data due today. Risk sentiment will be in the driving seat. ECB’s Christine Lagarde is due to speak later and could provide some clarity as to whether the ECB will adopt a more dovish stance in light of the Russia, Ukraine conflict..
Where next for EUR/USD?
EURUSD trades over 0.7% lower heading towards the European open although the pair has picked up off the intraday low of 1.1130, but the recovery is struggling at Friday’s low of 1.1170.
The RSI is supportive of further downside whilst it remains out of oversold territory. Sellers will need to take out 1.1120 the daily low to attack 1.11 the 20 month low. A move below here would create a lower low potentially seeing sellers gain traction towards 1.10.
A corrective pullback above 1.1225 the December low could see buyers then target 1.1275 and to 1.1335 the 50 sma and falling trendline support.
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